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Financial Crimes
08/07/2008

Brothel owner pleads guilty to federal charges and agrees to forfeit more than $12 million in assets

SANTA ANA, Calif. - A West Covina, Calif., woman, who ran a string of brothels out of chiropractic offices, acupuncture clinics, "spas," tanning salons and massage parlors in Southern California and Dallas, faces up to 15 years in prison after pleading guilty today to felony criminal charges for her role in the scheme.

Jong Ock Mao, 50, a.k.a. "June," appeared before U.S. District Judge James Selna here today and pleaded guilty to two felony counts - conspiring to use interstate commerce to promote prostitution and using the proceeds from her six brothels to purchase real estate. As part of her guilty plea, the naturalized Korea native also agreed to forfeit more than $12 million dollars in property and assets she derived from the prostitution scheme. The forfeited properties include four private motocross tracks in California, Texas, and Florida operated by MX Oasis, a company owned by Mao. Mao' sentencing is scheduled for October 20 at 8:30 a.m.

Today's guilty plea stems from an investigation by U.S. Immigration and Customs Enforcement (ICE), IRS-Criminal Investigation Division, and the Los Angeles County Sheriff's Department.

Mao's plea agreement details how, in the late 1990s, she began operating a series of establishments purporting to offer massage therapy, acupuncture, chiropractic services, and tanning. In reality, the businesses, five in Southern California and one in Dallas, offered customers sexual services. In April 2006, Mao and three other defendants were indicted for their role in the scheme.

The other defendants include Edward Lutt, 45, of Paramount, Calif., whom investigators allege oversaw the day-to-day operation of the brothels. Lutt remains in federal custody pending his trial, which is scheduled to begin Feb. 24, 2009.

The other two defendants in the case are Charles Fields, 51, of Long Beach, Calif., and Randall Johnson, 54, of Los Angeles. According to the case indictment, Fields and Johnson obtained the business licenses for Mao's establishments. In August 2007, both men entered guilty pleas. Fields pleaded guilty to two felony counts, conspiracy to use interstate commerce to promote prostitution and conspiracy to engage in money laundering. Johnson pleaded guilty to one felony count, conspiracy to engage in money laundering. Both men are awaiting sentencing.

According to the case indictment, Mao operated brothels in three Los Angeles area communities, Baldwin Park, Inglewood and South Gate, as well as an establishment in Dallas known as the Paradise Spa.

"Today's guilty plea represents another important chapter in a joint investigation that led to the breakup of one of the most lucrative prostitution schemes ever uncovered in Southern California," said Robert Schoch, special agent in charge for the ICE office of investigations in Los Angeles. "The fact this defendant agreed to forfeit more than $12 million in assets as part of her plea is a testament to the scope of this criminal scheme."

"The cooperative effort in this investigation shows how federal and local law enforcement is committed to combating prostitution activity that crosses state lines," said acting special agent in charge Ellon Lindsey, IRS-Criminal Investigation, Los Angeles Field Office. "IRS-Criminal Investigation will aggressively follow the money trail and forfeit assets purchased with illicit funds generated by prostitution operations."